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Boston Beer Co. Inc. Message Board

  • traderjack05 traderjack05 Aug 8, 2006 8:17 AM Flag

    SAM is a buyout target

    Morningstar mentions that SAM is an attractive buy-out taget for one of the big berweries. MBC contract brews already in their Eden North Carolina brewery for them as SAM does not have the capacity to sell all the beer they can sell.
    High Energy costs in the form of Freight costs are having an effect on profits, as all breweries are experiencing, but Buds recent quarter looked good, so lets hope that SAMS looks good too. Earnings are reported today at 10AM

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    • If Miller did that with Leinie think what one of the big boys (BUD, INBEV, SAB even Coors)could do with a beer the quality of SAM. Jimbo is no dummy he's just waiting for the right time. Maybe, right before he spends $150 MILLION on a new plant.

    • I would really be surprised if anyone tried a hostile takeover at the current price. SAM really is too expensive.

      One would probably have to offer a 30% premium over the current price (~$33 per share) to successfully induce shareholders to tender their shares, say $43 per share. Multiply that by 14.346 million total fully diluted shares, add in another $140 million for a new brewery to replace the expiring contract work, subtract the $65 million in cash already on the books, and that puts the final price around $692 million. And for what? Around $30 million in EBITDA? That calculates to a hypothetical (and ludicrous) Enterprise Value to EBITDA ratio of 23. My guess is that Jim runs a pretty lean operation, no fat to cut, and other than surplus capacity at an existing big beer company (that would knock the price of the new brewery off the price), probably very little in the way of synergies either.

      And lastly, depending on "who" took it over, the very fact that "they" did, might result in future lost sales for them as well. When you're customer is paying about two bucks more per six pack than he really has to, his brand loyalty can be destroyed by the smallest changes or even the mere perception that a change has taken place. A warning shot across the bow, so to speak.

      A very bad idea in my opinion.

      • 1 Reply to jad1148
      • jad1148 You have outdone yourself for stupid dimwitted posts! SAM would be acquired by a buyer with excess capacity hence no need for more brewing kettles......SAM's 300 million is sales would be produced at Variable cost to the buyer ...they already have the capacity and the fixed charges .....Also Jim controls the BOD plus 33% of the equity ...if Jim says sell it's sold..... I fail to see the need to sell now since SAM is growing volumn at 17% .....go back and reread your dimwitted sourse material the Value Line.....If your short the stock cover and if you must do something like that short SJM with what's left of your money.....

    • Sure looks like it - this stock is taking off.
      Is Bud taking over?

    • last night he said buy bud. "it may run 5% higher". see the below referenced article of 1 year ago when he said sell sam price ($23.47). he may make it a double sell now. how much do they pay this clown?

    • I now know that the president and owner owns controling interest in this company and I doubt he will give it up, he has beer in his blood, and so do I.

    • Just wondering - do you really feel that this is a buyout target? It doesnt really feel as though its part of Jimmys gameplan.

      Kicking ass in mass market by the way-


      • 1 Reply to berezotko
      • I thought SAM was a buyout at $7, at $12, and thought a bid was coming when SAM hit $20. I just don't see it happening now. The valuation on SAM is just too high. All the big brewers trade at much lower PE's. Buying SAM would hurt their earnings. They would have to think that with their brewing capacity and distribution, they could really squeeze out alot of extra cash out of SAM. But to buy SAM, they would have to offer a big enough premium to Jim to sell. Why would he sell? He is too young and having too much fun. They are talking about building a new brewery for $120 million (I think they should buy one of the Rolling Rock breweries that closed), maybe if they get scared taking on that kind of risk, they may look for a buyer. If there were a buyout, my guess would be that Jim takes the company private @ a small premium, and then sells a minority to stake to large brewer (a better premium for Jim).

        I like the way things are going now, they really look like they are getting some sales momentum. I would prefer they stay the course.

        Just my opinion, cheers!

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